UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 11-1726

UNITED STATES OF AMERICA ex rel. PAUL R. BLACK,

Plaintiff - Appellant,

v.

HEALTH & HOSPITAL CORPORATION OF MARION COUNTY,

Defendant – Appellee,

and

DOUGLAS L. ELWELL; MATTHEW R. GUTWEIN; MYERS AND STAUFFER 

LC,

Defendants.

Appeal from the United States District Court for the District of 

Maryland, at Baltimore. Richard D. Bennett, District Judge. 

(1:08-cv-00390-RDB)

Argued: May 18, 2012 Decided: August 17, 2012

Before AGEE, DAVIS, and THACKER, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Barry Coburn, COBURN & GREENBAUM, PLLC, Washington, 

D.C., for Appellant. Jessica Lynn Ellsworth, HOGAN LOVELLS US 

LLP, Washington, D.C., for Appellee. ON BRIEF: Jonathan L. 

Diesenhaus, Thomas J. Widor, HOGAN LOVELLS US LLP, Washington, 
2

D.C.; Joseph H. Young, HOGAN LOVELLS US LLP, Baltimore, 

Maryland, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
3

PER CURIAM:

Relator Paul R. Black appeals the district court’s 

dismissal of his Amended Complaint, alleging various claims 

under the False Claims Act, 31 U.S.C. §§ 3729, et seq. (the 

“FCA”). The district court held that it did not possess subject 

matter jurisdiction over Black’s claims, and even if it did 

possess jurisdiction, the Amended Complaint failed to state a 

claim under the Federal Rules of Civil Procedure. Black also 

challenges the district court’s denial of his request for leave 

to file a Second Amended Complaint. Because we agree that the 

district court lacked subject matter jurisdiction pursuant to 

the FCA’s public disclosure bar, 31 U.S.C. § 3730(e)(4)(A), we 

affirm without reaching the alternate grounds for dismissal. We 

also affirm the district court’s denial of Black’s request for 

leave to file a Second Amended Complaint. 

I.

A.

On February 12, 2008, Relator Black filed this FCA qui

tam action in the United States District Court for the District 

of Maryland against Appellee Health and Hospital Corporation of 

Marion County, Indiana (“HHC”), a municipal corporation and 

political subdivision of the State of Indiana that owns and 
4

operates nursing home facilities.1 See J.A. 8-73.2 Although the 

government declined to intervene in this action, Black proceeded 

individually pursuant to 31 U.S.C. § 3730(b)(4)(B). He then 

filed an Amended Complaint on August 23, 2010, which alleges a 

scheme orchestrated by HHC in which Medicaid reimbursements were 

fraudulently obtained for nursing home expenditures that HHC 

never made. See id. at 100-57. 

Specifically, the Amended Complaint includes four 

counts: 

Count I, that HHC caused state Medicaid agencies to 

submit factually false claims to the Centers for 

Medicare and Medicaid Services (“CMS”), in violation 

of 31 U.S.C. § 3729(a)(1);3

Count II, that HHC caused state Medicaid agencies to 

submit legally false claims to CMS, in violation of 31 

U.S.C. § 3729(a)(1); 

 1 This is the second qui tam action Black, an attorney 

licensed in Indiana, has filed against HHC. He filed the first 

in the United States District Court for the Southern District of 

Indiana in October 2003. After he amended his complaint once in 

Indiana and the government declined to intervene, he dismissed 

that action without prejudice. 

2 Citations to the “J.A.” refer to the Joint Appendix filed 

by the parties in this appeal.

3 The subsections under which these claims arose were renumbered in May 2009. At the time that Black’s initial 

Complaint was filed, § 3729(a)(1) provided that a person could 

be held liable for a civil penalty and treble damages if he or 

she “knowingly presents, or causes to be presented, to an 

officer or employee of the United States Government or a member 

of the Armed Forces of the United States a false or fraudulent 

claim for payment or approval[.]” 31 U.S.C. § 3729(a)(1) 

(2006), amended May 2009.
5

Count III, that HHC made and used, and caused to be 

made and used, false records and statements to get 

false or fraudulent claims paid or approved by the 

government, in violation of 31 U.S.C. § 3729(a)(2);4

and 

Count IV, that HHC entered into a conspiracy to 

defraud the government, in violation of 31 U.S.C. § 

3729(a)(3).5 

J.A. 153-55. The following excerpt from Black’s Amended 

Complaint summarizes the allegations of HHC’s wrongdoing:

Congress has made federal taxpayer funds 

available to help states provide medical care to their 

poorest citizens. But Congress requires a basic 

commitment in return — each state must use its own 

funds to pay its fair share of those Medicaid 

expenses. The federal government reimburses 

approximately 62% of Indiana’s Medicaid expenditures.

In order to qualify for that 62% reimbursement, the 

State of Indiana must spend the other 38% from its own 

funds on actual care for Medicaid recipients. . . .

In 2001, HHC persuaded Indiana Medicaid officials 

to tell the federal government that Indiana was 

spending an extra $57 per day on all Medicaid patients 

living in county nursing homes. Since 2001, HHC has 

given Indiana Medicaid officials pieces of paper 

saying that HHC had spent enough money on nursing home 

 4 Subsection (a)(2) provided that a person could be held 

liable for a civil penalty and treble damages if he or she

“knowingly makes, uses, or causes to be made or used, a false 

record or statement to get a false or fraudulent claim paid or 

approved by the Government[.]” 31 U.S.C. § 3729(a)(2) (2006), 

amended May 2009.

5 Subsection (a)(3) provided that a person could be held 

liable for a civil penalty and treble damages if he or she

“conspires to defraud the Government by getting a false or 

fraudulent claim allowed or paid[.]” 31 U.S.C. § 3729(a)(3) 

(2006), amended May 2009.
6

patients to cover Indiana’s share of that extra $57 

per patient per day on all county nursing homes in the 

state, and was doing “intergovernmental transfers” to 

the state of Indiana matching those amounts. Indiana 

Medicaid officials then gave HHC pieces of paper 

saying that the state was returning the money to HHC.

In fact, HHC had not spent any substantial extra money 

on the patients in its nursing homes.

Relying on Indiana’s false claims that it had

used state funds to pay its share of an extra $57 per 

patient per day for Medicaid patients in county 

nursing homes, the federal government reimbursed 

Indiana 62% of those claimed expenditures, amounting 

to hundreds of millions of dollars in unwarranted 

federal reimbursements since 2001. Indiana then 

shared that extra federal money with HHC. Neither 

Indiana nor HHC spent a substantial percentage of that 

extra federal money on patient care for nursing home 

residents, as required by law[.] 

J.A. 100-101.

On November 19, 2010, HHC filed a Motion to Dismiss, 

arguing (1) the court lacked subject matter jurisdiction under 

the FCA pursuant to the “public disclosure bar,” 31 U.S.C. § 

3730(e)(4), and Federal Rule of Civil Procedure 12(b)(1); (2) 

venue was improper in the District of Maryland, pursuant to Rule 

12(b)(3); and (3) the Amended Complaint failed to state a claim 

under the FCA, pursuant to Rules 12(b)(6) and 9(b). See Mem. 

Supp. Motion to Dismiss at 15, United States ex rel. Black v. 

Health & Hosp. Corp., No. 1:08-cv-00390 (D. Md. Feb. 12, 2008; 

filed Nov. 19, 2010), ECF No. 30-1. Black responded on January 

3, 2011, and also filed a separate “Motion to Defer Potential 

Motion for Leave to Amend Until Resolution of Motion to Dismiss” 
7

(hereinafter, “Motion to Defer”). The motion asked the court to 

“defer the period for him to move to amend until after the Court 

resolves the Motion to Dismiss” and stated, “the Court will be 

in a better position to evaluate any motion for leave to amend . 

. . after it has decided HHC’s pending Motion to Dismiss.” Mem. 

Supp. Motion to Defer at 2, Black, No. 1:08-cv-00390 (D. Md. 

Feb. 12, 2008; filed Jan. 3, 2011), ECF No. 33-1.

On March 28, 2011, the district court dismissed the 

Amended Complaint with prejudice and denied the Motion to Defer. 

See United States ex rel. Black v. Health & Hosp. Corp., No. 

RDB-08-0390, 2011 WL 1161737 (J.A. 559-84) (D. Md. Mar. 28, 

2011) (the “District Court Opinion”). First, the court held 

that subject matter jurisdiction was lacking under Federal Rule 

of Civil Procedure 12(b)(1) based on the FCA’s jurisdictional 

public disclosure bar. Second, the court explained that even if 

it possessed subject matter jurisdiction, the Amended Complaint 

could also be dismissed under Rules 12(b)(6) or 9(b).6

 See J.A. 

8-24.

On April 11, 2011, Black filed a Motion for Leave to 

File Second Amended Complaint, along with a Motion for 

 6 The District Court Opinion did not address the venue 

argument. Although we have doubts about the reasoning proffered 

by Black on this point at the district court level, we assume 

without deciding that venue was proper in the District of 

Maryland. 
8

Reconsideration of the court’s denial of his Motion to Defer. 

The court denied both on June 15, 2011. See J.A. 720-25.

B.

1.

The backdrop to Relator Black’s Amended Complaint 

involves the interplay between state and federal funding of the 

Medicaid program. Medicaid is a state-administered health care 

program for low-income individuals, but the federal government 

contributes varying costs, depending on the state. See Ark. 

Dep’t of Health & Human Servs. v. Ahlborn, 547 U.S. 268, 275 

(2006); 42 U.S.C. § 1396, et seq. The program is regulated by 

the Secretary of the United States Department of Health and 

Human Services, who acts through CMS. See Ahlborn, 547 U.S. at 

275. 

In order to receive federal funds for Medicaid, a 

state must create a “State plan.” 42 U.S.C. § 1396a. The State 

plan is “a comprehensive written statement . . . describing the 

nature and the scope of [the state’s] Medicaid program and 

giving assurance that it will be administered in conformity” 

with the applicable federal laws and regulations. 42 C.F.R. § 

430.10. CMS reviews each plan to determine whether it can be 

approved “to serve as a basis for Federal financial 

participation (FFP) in the State program.” Id. 
9

Once a State plan is submitted and approved by CMS, 

the state can receive federal reimbursement for “an amount equal 

to the Federal medical assistance percentage . . . of the total 

amount expended . . . as medical assistance under the State 

plan,” 42 U.S.C. § 1396b(a)(1), also known as the “FMAP.” 42 

C.F.R. § 400.203. Each state must provide a prospective 

quarterly estimate of its anticipated Medicaid expenditures, and 

CMS uses that number and the FMAP to calculate the federal funds 

due to the state. See id. § 430.30 (a)–(d). 

For years, state governments have utilized various 

funding mechanisms to maximize their state Medicaid expenditures 

in order to obtain an increased federal match, and three such 

mechanisms are relevant to this appeal. First, the upper 

payment limit mechanism (“UPL”) allows states to reimburse 

health care facilities for uncompensated care, but reimbursement 

is limited to the amount that the Medicare program would have 

paid for the same services. See 42 C.F.R. § 447.272(b). 

Second, states can receive intergovernmental transfers (“IGTs”) 

from local governments, usually in the form of taxes, which can 

then qualify for federal matching funds. IGTs “allow units of 

local government, including government health care providers, to 

share in the cost of the State Medicaid program.” 72 Fed. Reg. 
10

2236, 2238 (Jan. 18, 2007).7 Finally, states also utilize 

certified public expenditures (“CPEs”), which allow Medicaid 

providers to make direct Medicaid expenditures that qualify as 

part of the state’s share for federal matching funds. CPEs must 

be “certified by the contributing public agency as representing 

expenditures for FFP[.]” 42 C.F.R. § 433.51(b). 

In the early 2000s, the Medicaid funding landscape 

changed when Congress adopted a system that would set new UPLs 

on overall aggregate payments to Medicaid providers by class 

(e.g., state government-owned, local government-owned, or 

private entities), rather than by provider. See 66 Fed. Reg. 

3148 (Jan. 12, 2001); Alameda County Med. Cntr. v. Leavitt, 559 

F. Supp. 2d 1, 2 (D.D.C. 2008) (explaining that CMS had “refined 

a system based on [UPLs], with reimbursements calculated using 

aggregate, and not provider-specific, cost data”). The 

revisions were meant to limit the ability of the states to 

 7 IGTs are authorized by the Social Security Act. 

Specifically, the Social Security Act provides that “the 

Secretary may not restrict States’ use of funds where such funds 

are derived from State or local taxes . . . transferred from or 

certified by units of government within a State as the nonFederal share of [Medicaid] expenditures . . . regardless of 

whether the unit of government is also a health care 

provider[.]” 42 U.S.C. § 1396b(w)(6)(A). Indeed, Indiana law 

requires that “[e]ach governmental transfer or other [Medicaid] 

payment mechanism . . . must maximize the amount of federal 

financial participation that the state can obtain through the 

[IGT] or other payment mechanism.” Ind. Code § 12-15-14-1(c).
11

manipulate UPL/IGT mechanisms in order to increase receipt of 

federal matching funds. See 67 Fed. Reg. 2602 (Jan. 18, 2002). 

However, because the UPL scheme came to be defined in 

the class aggregate, rather than by Medicaid provider, it was 

possible for a provider to receive an amount in excess of its 

former “individual UPL,” as long as the overall “class UPL” was 

not exceeded. Because Medicaid is generally funded at a lower 

rate than Medicare, states often had an excess of funds, or a 

“UPL Gap,” from which to distribute monies to Medicaid providers 

of their choice. In practical terms, a state could make a 

“supplement payment” to any provider in a class and could 

structure that payment so that it would be funded in part by 

federal matching funds and in part by state funds. It could 

then recoup that payment through an IGT from the same provider. 

This method was permissible under the new regulations. 

2.

CMS repeatedly and publicly expressed concern with the 

UPL/IGT financing scheme used by the states to take advantage of 

aggregate UPLs, beginning at least as early as 2000. In 2007, 

CMS sought to issue a new regulation that would have 

significantly curtailed the states’ use of the UPL/IGT scheme by 

returning to a system of reimbursement on a cost-to-provider 

basis. See 72 Fed. Reg. 2236 (Jan. 18, 2007) (the “2007 
12

Proposed Rule”).8 The 2007 Proposed Rule was never adopted. In

fact, Congress enacted a one-year moratorium on the issuance of 

the rule or any rule like it. See Leavitt, 559 F. Supp. 2d at 

2.

During the time leading up to the introduction of the 

2007 Proposed Rule and thereafter, however, public debate on 

this issue thrived. Congress held numerous public hearings on 

the subject. See, e.g., Upper Payment Limits: Federal Medicaid 

Spending for Non-Medicaid Purposes, Hearing Before S. Comm. On 

Finance, 106th Cong. 1-2 (Sept. 6, 2000) (statement of Sen. 

William V. Roth, Jr., Chairman) (describing the use of UPL 

payments as a “complicated accounting mechanism” that “tak[es] 

advantage of a loophole” in the applicable federal regulations); 

id. at 3 (statement of Sen. John Breaux) (“[M]y State has found 

out that this procedure, in fact, is not illegal, and therefore, 

is legal and has filed an application to do what, apparently, 19 

other States currently are doing, and 14 states, in addition to 

 8 The “Background” section of the 2007 Proposed Rule states, 

“We have found instances in which the State or local government 

has used the funds returned by the health care provider for 

costs outside the Medicaid program or to help draw additional 

Federal dollars for other Medicaid program costs. The 

Government Accountability Office (GAO) and the Department of 

Health and Human Services Office of Inspector General (OIG) have 

reviewed these practices and shared our concerns that they are 

not consistent with Medicaid financing requirements.” 72 Fed. 

Reg. at 2238.
13

mine, have applications, in fact, to do.”). Legislative reports

addressed the same. See, e.g., Elicia J. Herz, Cong. Research 

Serv., RL31021, Medicaid Upper Payment Limits and 

Intergovernmental Transfers: Current Issues and Recent 

Regulatory and Legislative Action (2005); U.S. Gov’t 

Accountability Office, GAO-02-147, Medicaid: HCFA Reserved Its 

Position and Approved Additional State Financing Schemes (2001). 

Indiana media outlets also featured these issues. 

See, e.g., Art Lodgson, Editorial: Medicaid Patients at Risk 

from State’s Budget Knife, The Indianapolis Star, Mar. 11, 2002, 

at A9 (J.A. 400-01); Nursing Homes, Medicaid Make Deal, 

Evansville Courier & Press, Mar. 12, 2002, at B3 (J.A. 403). In 

fact, Indiana’s Medicaid financing scheme drew national 

attention when the New York Times highlighted a dispute between 

Indiana and CMS over Marion County’s IGTs. See Robert Pear, 

U.S. Nears Clash with Governors on Medicaid Cost, N.Y. Times, 

Feb. 16, 2004 (J.A. 405).

C.

In his Amended Complaint, Black alleges that HHC 

executives and officials at the Office of Medicaid Policy and 

Planning (“OMPP”), the Indiana state agency responsible for 

administering the state Medicaid program, acted “in concert” to 

draft a proposed amendment to the Indiana State Plan. Am. 

Compl. ¶ 51. This amendment, Black claims, “was designed to 
14

appear to take advantage of the Medicaid UPL Regulation that 

permits state Medicaid agencies to claim and receive . . . 

additional [UPL payments], provided that the state actually 

expended such amounts on nursing facility care.” Id. ¶ 52 

(emphases in original).

The amendment to the State Plan about which Black 

complains was approved by CMS. Nonetheless, Black claims that 

“under the fraudulent scheme entered into between HHC and OMPP, 

no expenditures were actually made by OMPP and, ultimately, only 

CMS paid any part toward the supposed supplemental UPL Medicaid 

Payments.” Am. Compl. ¶ 63. Black says that, as part of this 

“scheme,” “HHC avoided having OMPP make any actual expenditures 

simply by having OMPP falsely . . . claim . . . amounts that 

OMPP ‘certified’ it had ‘spent,’ and/or amounts that were 

purportedly transferred to OMPP by means of [IGTs], which were 

subsequently ‘transferred’ back from OMPP to HHC, rather than 

‘spent.’” Id. ¶ 64. 

Black also claims that HHC and OMPP entered into a 

“[s]ecret” written agreement in February 2002 to “unlawfully 

obtain FFP for UPL payments[.]” Am. Compl. ¶ 92. This 

agreement shows, he says, that HHC provided “false

certification” that its “funds” constituted “expenditures” under 

the Social Security Act, but an expenditure “cannot be merely a 

refund or reduction in accounts receivable.” Id. ¶ 98-99. 
15

Black further claims that “OMPP’s use of HHC’s purported IGTs as 

a basis for the UPL Medicaid payments violates OMPP’s commitment 

in the State Plan that only state funds are used to pay all of 

the non-federal share of the total expenditures.” Id. ¶ 106. 

Likewise, he claims that HHC reported “contrived” CPEs in 

violation of CMS’s policies set forth in the 2007 Proposed Rule. 

Id. ¶ 102.

The district court dismissed Black’s Amended Complaint 

pursuant to the FCA’s jurisdictional “public disclosure bar,” 31 

U.S.C. § 3730(e)(4)(A). The purpose of the public disclosure 

bar is “to prevent lawsuits by private citizens [when] th[e] 

[relevant] authority is already in a position to vindicate 

society’s interests, and a qui tam action would serve no 

purpose.” Glaser v. Wound Care Consultants, Inc., 570 F.3d 907, 

913 (7th Cir. 2009) (internal quotation marks omitted). This is 

because, where a public disclosure has occurred, “the critical 

elements exposing the [alleged fraud]” are already placed in the 

public domain. Id. (internal quotation marks omitted). 

At the time the Amended Complaint was filed, the 

public disclosure bar provided,

(A) No court shall have jurisdiction over an 

action under this section based upon the public 

disclosure of allegations or transactions in a 

criminal, civil, or administrative hearing, in a 

congressional, administrative, or Government 

Account[ability] Office report, hearing, audit, or 

investigation, or from the news media, unless the 
16

action is brought by the Attorney General or the 

person bringing the action is an original source of 

the information. 

(B) For purposes of this paragraph, “original 

source” means an individual who has direct and 

independent knowledge of the information on which the 

allegations are based and has voluntarily provided the 

information to the Government before filing an action 

under this section which is based on the information. 

31 U.S.C. § 3730(e)(4) (2006), amended March 23, 2010.9

 

 9 The statute was later amended to provide,

The court shall dismiss an action or claim under this 

section, unless opposed by the Government, if 

substantially the same allegations or transactions as 

alleged in the action or claim were publicly disclosed

—

(i) in a Federal criminal, civil, or 

administrative hearing in which the 

Government or its agent is a party;

(ii) in a congressional, Government 

Accountability Office, or other Federal 

report, hearing, audit, or investigation; or

(iii) from the news media,

unless the action is brought by the Attorney 

General or the person bringing the action is 

an original source of the information.

31 U.S.C. § 3730(e)(4). The Supreme Court has observed that the 

new statute lacks the explicit language that would make it 

retroactive. See Graham Cnty. Soil & Water Conservation Dist. 

v. United States ex rel. Wilson, ___ U.S. ___, 130 S. Ct. 1396, 

1400 & n.1 (2010). Even if it would apply retroactively, 

however, as explained infra, Black’s claim still does not 

survive under the narrower reading adopted by this court prior 

to March 23, 2010. 
17

In invoking the public disclosure bar to dismiss this 

action, the district court found that Black’s allegations in the 

Amended Complaint “largely mimic the public criticism of the 

UPL/IGT Medicaid financing mechanisms that have been the subject 

of great debate within CMS, Congress, the GAO, and elsewhere 

since at least as early as 2000.” District Court Opinion 13. 

It also observed that many of Black’s concerns with Indiana and 

HHC’s Medicaid financing schemes “are substantially similar to 

[the] 2007 Proposed Rule[.]” Id. at 14. 

II.

As an initial matter, we are “obliged to satisfy 

ourselves of subject-matter jurisdiction[.]” United States v. 

Urutyan, 564 F.3d 679, 684 (4th Cir. 2009). See also Wye Oak 

Tech., Inc. v. Republic of Iraq, 666 F.3d 205, 218 (4th Cir. 

2011) (“[A] federal court has an independent obligation to 

assess its subject-matter jurisdiction.” (internal quotation 

marks omitted)). Federal district courts are “courts of limited 

subject matter jurisdiction” and “possess only the jurisdiction 

authorized them by the United States Constitution and by federal 

statute.” Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009). 

When a defendant challenges the existence of subject 

matter jurisdiction in fact, “the plaintiff bears the burden of 

proving the truth of such facts by a preponderance of the 
18

evidence.” Vuyyuru, 555 F.3d at 347. We review a district 

court’s jurisdictional findings of fact “on any issues that are 

not intertwined with the facts central to the merits of the 

plaintiff’s claims” for clear error. Id. at 348. We review 

“any legal conclusions flowing therefrom” de novo. Id. 

Under the clearly erroneous standard of review, the 

fact that this court may have decided the case differently is an 

insufficient basis to overturn a finding of fact. See Easley v. 

Cromartie, 532 U.S. 234, 242 (2001). We will only overturn a 

court’s finding of fact as clearly erroneous when, “although 

there is evidence to support it, the reviewing court on the 

entire evidence is left with the definite and firm conviction 

that a mistake has been committed.” United States v. U.S.

Gypsum Co., 333 U.S. 364, 395 (1948). 

When reviewing a district court’s denial of a motion 

for leave to amend a complaint, we employ an abuse of discretion 

standard. See Nolte v. Capital One Fin. Corp., 390 F.3d 311, 

317 (4th Cir. 2004). 

III.

A.

In adopting the FCA, Congress intended “to protect the

funds and property of the Government from fraudulent claims[.]” 
19

Rainwater v. United States, 356 U.S. 590, 592 (1958). This 

court has explained,

[The FCA’s] roots lie in the rampant fraud perpetrated 

by contractors against the government during the Civil

War, and it has served ever since as a safeguard 

against unscrupulous government contractors. The 

cornerstone provision of the FCA prohibits any person 

from presenting a false or fraudulent claim for 

payment or approval to the United States.

Mann v. Heckler & Koch Def., Inc., 630 F.3d 338, 342-43 (4th 

Cir. 2010) (internal citations and quotation marks omitted). 

See also United States ex rel. Owens v. First Kuwaiti Gen. 

Trading & Contracting Co., 612 F.3d 724, 728 (4th Cir. 2010). 

FCA actions may be brought by the Attorney General or by a 

private party. See 31 U.S.C. § 3730(a), (b). If a private 

party, commonly known as a “relator,” brings the claim, it is 

known as a “qui tam” action, and the relator acts “in the name 

of the United States.” Mann, 630 F.3d at 343. A relator may 

recover up to thirty percent of the proceeds of a successful 

action, plus attorney’s fees and costs. See 31 U.S.C. § 

3730(d). The relator files his or her complaint under seal and 

notifies the government, and the government will either 

intervene or allow the relator to proceed alone. Id. § 3730(b), 

(c). The public disclosure bar was enacted to “strike a balance 

between encouraging private persons to root out fraud and 

stifling parasitic lawsuits[.]” Graham Cnty. Soil & Water 
20

Conserv. Dist. v. United States ex rel. Wilson, ___ U.S. ___, 

130 S. Ct. 1396, 1407 (2010). 

B.

In an FCA action, when subject matter jurisdiction is 

challenged under the public disclosure bar, a court must engage 

in a three-pronged analysis to determine (1) if there was a 

public disclosure, (2) if the relator’s allegations were “based 

upon” the public disclosure, and, if so, (3) whether the relator 

is nonetheless “entitled to original source status” as “‘an 

individual who has direct and independent knowledge of the 

information on which the allegations [] are based[.]’” United 

States ex rel. Wilson v. Graham Cnty. Soil & Water Conserv. 

Dist., 528 F.3d 292, 299 (4th Cir. 2008), rev’d on other 

grounds, Graham Cnty., 130 S. Ct. at 1411; Vuyyuru, 555 F.3d at 

348 (quoting 31 U.S.C. § 3730(e)(4)(B) (2006)).10

1.

First, we must determine if the district court erred 

in concluding that a public disclosure occurred. The pre-March 

2010 public disclosure bar is triggered by “the public 

 10 Because the factual issues regarding the FCA’s public 

disclosure bar concern issues that are not intertwined with the 

facts central to Black’s FCA claims, the district court was 

entitled to go beyond the allegations of the Amended Complaint 

and consider evidence outside the pleadings, including Black’s 

statements in his sworn declaration filed on January 3, 2011. 

See Vuyyuru, 555 F.3d at 348-50; J.A. 495-501.
21

disclosure of allegations or transactions in a criminal, civil, 

or administrative hearing, in a congressional, administrative, 

or [GAO] report, hearing, audit, or investigation, or from the 

news media[.]” 31 U.S.C. § 3730(e)(4)(A) (2006); United States 

ex rel. Grayson v. Advanced Mgmt. Tech., Inc., 221 F.3d 580, 582 

(4th Cir. 2000). The district court found that this requirement 

was satisfied, explaining, 

CMS, the agency charged with administering the 

Medicaid program, has publicly expressed its concern 

with the individual states’ use of UPL and IGT 

financing mechanisms to leverage Federal Match funding 

from at least as early as 2000. As a result, the CMS 

and GAO engaged in a lengthy and systematic review of 

the state Medicaid financing programs. As part of 

this review, the CMS Administrator specifically noted 

that Indiana was among seven states that have worked 

cooperatively with [CMS] either to remove new 

recycling features or terminate existing recycling 

provisions in the future. While these disclosure 

[sic] did not specifically identify the Defendant HHC, 

they clearly show that the government was aware of the 

Medicaid financing schemes being utilized by the 

states in general, and Indiana in particular[.] 

District Court Opinion 11-12 (internal quotation marks and 

citations omitted). 

Black contends that “[t]he district court did not 

attempt to parse in detail the alleged similarity between the 

general observations about Medicaid reimbursement made by the 

GAO and Congress, as compared with the highly specific 

allegations” made in the Amended Complaint. Br. of Appellant 

16. The district court was not required to do so. There is no 
22

requirement under our case law that the public disclosure 

matches with specificity the allegations made by a qui tam

relator. Indeed, the Supreme Court has recognized that the 

first prong of the public disclosure bar is satisfied if the 

disclosure “put[s] the Federal Government on notice of a 

potential fraud.” Graham Cnty., 130 S. Ct. at 1404. 

Since Graham County, this court has held in an 

unpublished opinion that SEC forms were “public disclosures” 

because, even though they “[did] not necessarily alert federal 

agencies to wrongdoing, [they] certainly provide[] easily 

accessible notice of [] transactions . . . from which an 

investigation could have begun or developed.” United States ex 

rel. Jones v. Collegiate Funding Servs., No. 11-1103, 2012 WL 

835747, at *10 (4th Cir. Mar. 14, 2012). Other courts have 

likewise held that public disclosures need not match the 

specificity of the FCA allegations. See, e.g., United States ex 

rel. Gear v. Emergency Med. Assocs. of Ill., 436 F.3d 726, 729 

(7th Cir. 2006) (citing GAO reports and medical news reports 

about improper Medicare billing as examples of public 

disclosures, even when they did not name the FCA defendant); 

United States ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386, 

389 (6th Cir. 2005) (“[W]e do not require specific disclosure of 

fraud to find public disclosure.”). 
23

Furthermore, since at least 2000, there has been a 

robust public discussion about the propriety of the UPL/IGT 

mechanism. As the district court acknowledged, CMS, a 

government agency, publicly relayed perceived deficiencies with 

the UPL/IGT mechanism throughout the country and, specifically, 

in Indiana. See District Court Opinion 11-12. The discussion 

was manifested in GAO reports, congressional reports and 

hearings, and in various forms of news media. These items fall 

directly within the confines of the public disclosure bar 

statute, and as a result, they were sufficient to “put the 

Federal Government on notice of a potential fraud.” Graham 

Cnty., 130 S. Ct. at 1404. 

Therefore, the district court did not err in finding 

that a public disclosure occurred. 

2.

Second, we address whether the district court erred in 

finding that Black’s allegations underpinning his FCA claims 

were “based upon” public disclosures. 

Before the 2010 revisions to the public disclosure 

bar, the “based upon” language of (e)(4)(A) was construed more 

narrowly in the Fourth Circuit than in other courts. In Siller 

v. Becton Dickinson & Co., the court held that “a relator’s 

action is ‘based upon’ a public disclosure of allegations only 

where the relator has actually derived from that disclosure the 
24

allegations upon which his qui tam action is based.” 21 F.3d 

1339, 1348 (4th Cir. 1994) (emphasis added). See also United 

States ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 57 (1st 

Cir. 2009) (“[T]he Fourth Circuit [is] alone among the courts of 

appeals in favoring a narrow reading of the ‘based upon’ 

language.”). However, in 2009, this court held that the public 

disclosure bar “encompasses actions even partly based upon prior 

public disclosures.” Vuyyuru, 555 F.3d at 351-52 (emphasis 

added). 

Black’s Amended Complaint — at the very least —

encompasses actions partly based on public disclosures. The 

district court found that the Amended Complaint “essentially 

parrot[s]” the concerns outlined in the 2007 Proposed Rule; 

“tracks the public debate surrounding the issue”; and “borrows 

heavily from CMS’ publicly disclosed concerns with the UPL/IGT 

program.” District Court Opinion 14-15. These findings are not 

clearly erroneous. 

First, the Amended Complaint reflects the core of the 

2007 Proposed Rule and other public disclosures. For example,

• Black alleges that UPL payments to Indiana were 

impermissible because the state did not actually 

expend such amounts of nursing care under 

Medicaid. See Am. Compl. ¶ 52, 63-64. The 2007 

Proposed Rule provides similarly. See 72 Fed. 

Reg. at 2236-40. See also J.A. 290, 292 (Office 

of Inspector General Memorandum) (explaining 

that, in conducting audits of six states, the OIG 

found “the enhanced payments to local government-
25

owned providers were not based on the actual cost 

of providing services to Medicaid beneficiaries”

and recommending that states “must demonstrate 

that . . . payments were actually made available 

to the facilities and the facilities used the 

fund to furnish Medicaid approved services”). 

• Black alleges that HHC’s IGTs or CPEs were 

“merely a refund or reduction in accounts 

receivable.” Am. Compl. ¶ 99. This same 

sentiment was echoed in public documents. See, 

e.g., J.A. 291 (Office of Inspector General 

Memorandum) (“[Use of UPL Gap funds for IGTs] 

draws into question whether the amounts returned 

to the State agencies constitute a refund 

required to be reported as other 

collections[.]”). 

• Black alleges that HHC’s IGTs or CPEs were not in 

compliance with the 2007 Proposed Rule. Am. 

Compl. ¶ 100-04 (citing 2007 Proposed Rule, 72

Fed. Reg. 2236-01).

• Black alleges that the source of IGTs were not 

state and local tax revenue, as required under 

the Indiana State Plan. See Am. Compl. ¶ 106-07. 

The 2007 Proposed Rule similarly provides, “the 

State must be able to demonstrate [] [t]hat the 

source of the [IGTs] is State or local tax 

revenue[.]” 72 Fed. Reg. 2236. 

Moreover, Black’s own sworn declaration undercuts his argument. 

He admits that before he filed his initial complaint in this 

court, he “reviewed the 2007 CMS proposal to adopt new 

regulations related to IGTs, CPEs, and UPL financing 

arrangements” and used it to “help[] [him] better articulate” 

his legal theory. J.A. 500. For these reasons, the district 

court did not clearly err in its decision on the second prong.
26

3.

Finally, Black’s last opportunity to survive HHC’s 

motion to dismiss is to prove that he is entitled to “original 

source” status. In order to achieve original source status, 

Black must prove beyond a preponderance of the evidence that he 

has “direct and independent knowledge of the information on 

which his allegations are based and has voluntarily provided the 

information to the Government[.]” 31 U.S.C. § 3730(e)(4)(B)

(pre-March 2010). A relator’s knowledge is “direct” if “he 

acquired it through his own efforts, without an intervening 

agency,” and it is “independent” if “the knowledge is not 

dependent on public disclosure.” Grayson, 221 F.3d at 583 

(internal quotation marks omitted).

Black has simply not put forth the evidence necessary 

to prove that he is an original source of the information in his 

Amended Complaint. In this regard, he proffered that he 

contacted Bob Decker, a client who “had considerable experience 

with Indiana nursing homes, and is a smart man.” J.A. 496. 

According to Black, they discussed the UPL/IGT mechanism at 

length, and Decker supplied Black with documents concerning the 

Medicaid financing arrangements between HHC and Indiana. Id. at 

496-97. Black says he also spoke with a woman named Faith 

Laird, who said she had “recorded a statement from a nursing 

home operator admitting that he had received a cash payout from 
27

HHC as a share of the extra FFP HHC has received” and had 

“written out a ‘conspiracy chart’” related to the UPL scheme. 

Id. at 498. 

Moreover, Black’s purported status as the “original 

source” must rest on more than a guessing game. As explained in 

Vuyyuru, a person’s “mere suspicion that there must be a false 

or fraudulent claim lurking around somewhere simply does not 

carry his burden of proving that he is entitled to original 

source status.” 555 F.3d at 353. Yet Black admitted in his 

initial Complaint that he never had “access to all the books and 

records of Defendants that may be relevant to this action” and 

was therefore not “in a position to identify, in all cases, all

the specific documents used to make the false or fraudulent 

claims[.]” Compl. ¶ 24 (J.A. 14). Rather, he explains that, “I 

knew in my gut that HHC’s UPL deal with the State was illegal.” 

J.A. 498. This is not enough. Due to the “glaring lack of 

evidence” of Black’s direct and independent knowledge, Vuyyuru, 

555 F.3d at 354, we affirm the district court’s decision on the 

original source issue.

We therefore affirm the district court’s dismissal of 

this claim under the public disclosure bar.11 

 11 Because we agree with the court’s decision on the public 

disclosure bar, we need not reach the alternative ground for 

(Continued)
28

C.

Black also asks us to reverse the district court’s 

denial of his request for leave to file a Second Amended 

Complaint. First, he filed the Motion to Defer on January 3, 

2011, and then, the Motion for Leave to File Second Amended 

Complaint and Motion for Reconsideration of the court’s denial 

of the Motion to Defer on April 11, 2011. The court denied all 

three, and Black argues that the court erred in doing so. We 

find his arguments to be without merit. 

Black admits that “[t]his issue arose in a somewhat 

unusual procedural posture” in his filing of the Motion to 

Defer, but he argues that his motion “was tantamount to making a 

standard request for leave to amend if the motion to dismiss was 

granted.” Br. of Appellant 21. We disagree. As the district 

court explained, “this unusual request certainly runs afoul of 

its purpose, which is to ‘provide the district court with a 

means by which to determine whether the amendment would cure the 

defects in the initial complaint.’” District Court Opinion 24 

(quoting Francis v. Gaicomelli, 588 F.3d 186, 197 (4th Cir. 

2009)). 

 

dismissal under Rules 12(b)(6) and 9(b). See Schramm, Inc. v. 

Shipco Transp., Inc., 364 F.3d 560, 566 n.2 (4th Cir. 2004). 
29

Turning to the denial of Black’s Motion to Amend and 

Motion for Reconsideration on April 11, 2011, the district court 

correctly noted that these motions are essentially “moving this 

Court to reconsider its dismissal of the complaint.” J.A. 722. 

The court had already ruled that after “four[] iteration[s]” of 

his complaint, Black still failed to provide allegations 

sufficient to survive a motion to dismiss, and that further 

amendments would be futile. District Court Opinion 25. Indeed, 

the Supreme Court has held that “repeated failure to cure 

deficiencies by amendments previously allowed” and “futility of 

amendment” are acceptable grounds for denying a request for 

leave to amend the complaint. Foman v. Davis, 371 U.S. 178, 182 

(1962). The district court did not abuse its discretion in 

denying the motions.

IV.

For the foregoing reasons, the judgment of the 

district court is 

AFFIRMED.